Given the reduced announcements regarding Business Support measures in recent weeks, we haven’t provided an update for a month or so.
This updates consolidates a number of announcements in recent weeks
Clearly, there will be more to come in the upcoming Budget on 3 March 2021, when we will update further following the Budget.
COVID VAT deferral payment guidance
HMRC has now updated its guidance regarding the payment process/scheme for VAT deferred between 20 March 2020 – 30 June 2020.
The available options include:
- Paying the deferred VAT in full before 1 April 2021;
- Joining the new VAT deferral payment scheme (open between 23 February 2021 – 21 June 2021); or
- Agreeing an arrangement with HMRC by 30 June 2021 where extra help/support is required.
The HMRC guidance can be found here.
Unfortunately, agents cannot register clients for the new scheme.
VAT temporary reduce rate for hospitality, holiday accommodation and attraction
Whilst firmly in the realms of speculation, we are hoping for an extension to the current 5% reduced rate for the hospitality, holiday accommodation and attraction sectors to be announced in the Budget.
The treatment of deposits paid during the current reduced rate period needs careful management.
Once the temporary reduced rate period ends (if it does), any deposits taken during the reduced rate period can remain at 5% and so the VAT already accounted for at 5% will not be reversed when the holiday is taken. For accommodation and meals, the 20% VAT rate will only apply to any amounts charged in excess of the deposit held.
There may be an opportunity to benefit further from the 5% rate by invoicing customers for deposits and/or encouraging them to pay the balance of their booking prior to the end of the reduced rate period. Where an invoice is raised in the reduced rate period, the 5% rate still applies even if the deposit is not actually paid until after the reduced rate period ends.
Extension of Bounce Back Loan repayment period
It has been announced that those that have borrowed under the Bounce Back Loan facility/scheme will have more flexibility around repayment – called the ‘Pay As You Grow’ repayment flexibilities.
Broadly, this will allow businesses to:
- Extend the length of the loan from 6 years to 10 years;
- Make interest-only payments for 6 months, with the option to use this up to 3 times throughout the loan;
- Pause repayments entirely for up to 6 months.
The Government’s News Story can be found here.
Self- assessment – 31 January 2021 late payment penalty extension
It has been announced that self-assessment taxpayers will not be charged a 5% late payment penalty/surcharge if the outstanding tax is paid, or a payment plan is set up, by 1 April 2021.
Please note that there will be a late filing penalty (different to the late payment position) if a 2019/20 self-assessment tax return is not filed on or before 28 February 2021.
The official Press Release can be found here.
Self-employed Income Support Scheme
Applications for the 3rd grant closed on 29 January 2021.
We are anticipating details of the 4th grant being announced as part of the Budget 2021.
Business interruption insurance – Test case update
The FCA has produced a useful policy checker and FAQs for businesses if their policy may cover business interruption losses caused by the pandemic as a result of the FCA’s test case, and provides information as to what course of action to take.
This policy checker can be found here.
This will take place on 3 March 2021.
This will inevitably include announcements on coronavirus business support measures, but also we are expecting a raft of tax changes.
We will, of course, provide updates following the Budget.